Is Now the Time to Buy Shopify Stock After Its Recent Dip?
Hey everyone, let’s talk about Shopify stock (SHOP) and whether its recent pullback presents a good buying opportunity. Shopify has been a major player in the e-commerce space, but its stock has taken a hit recently, dropping about 15.4% since its 52-week high on February 18. So, what’s going on?
A big part of the decline comes from macroeconomic concerns. The U.S. government, under President Trump’s administration, has implemented trade tariffs that affect key partners like China, Mexico, and Canada. The fear of a potential trade war put pressure on Shopify’s stock. However, when news surfaced that the upcoming tariffs might be more targeted, SHOP shares bounced back by nearly 5% to close at $109.28.
The big question is: does this dip make Shopify a buy? Well, Shopify’s valuation is a bit steep. Its current Price/Sales ratio stands at 12.46X, much higher than the sector average of 5.88X. Plus, with stiff competition in the e-commerce platform space, Shopify is making strategic moves, such as extending its paid trial period in some markets to boost retention. But this shift has had short-term effects on revenue growth, and the company expects some impact on its financial performance in early 2025.
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That said, Shopify’s business fundamentals remain strong. The company continues to expand its merchant base, thanks to innovative tools like Shop Pay, Shopify Pay Installments, and the Shop App. Shopify has outperformed the broader tech and internet services sectors so far this year, with its stock gaining 39.1% compared to the sector’s 9.8% rise.
Additionally, Shopify is continuously upgrading its platform, recently launching over 150 new features to help merchants streamline operations. Big brands like Reebok, Champion, and FC Barcelona are now using Shopify, broadening its reach into apparel, beauty, and international markets. Shop Pay’s adoption is also growing rapidly, with enhanced AI-driven personalization and new shopping experiences boosting engagement.
On top of that, Shopify’s strong partner network is a big advantage. Its partnerships with TikTok, Instagram, PayPal, YouTube, and even Roblox are helping it tap into new customer segments. By integrating its services with these platforms, Shopify is giving merchants more ways to sell and grow their businesses.
From an earnings perspective, analysts project Shopify’s revenue to grow 22.3% year-over-year in 2025, reaching $10.86 billion. The company has also consistently beaten earnings expectations in recent quarters, with an average surprise of over 22%.
So, should you buy Shopify stock now? If you already own shares, holding onto them might be a good idea given Shopify’s long-term growth potential. However, for new investors, the stock’s high valuation and economic uncertainties suggest it might be best to wait for a better entry point. Shopify currently holds a Zacks Rank #3 (Hold), meaning it’s not necessarily a strong buy at the moment, but it’s definitely a stock to keep on your radar.
What do you think? Are you considering buying Shopify stock on this dip, or are you waiting for a better opportunity? Let me know!
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